Über die Autorin bzw. den Autor

Hal J. Singer is managing director and principal at Navigant Economics. He is the coauthor of Broadband in Europe: How Brussels Can Wire the Information Society (Kluwer/Springer Press 2005).

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The Need for Speed

BROOKINGS INSTITUTION PRESS

Contents

1 Introduction..............................................................................12 Twentieth-Century Telecommunications Policy...............................................133 Toward a Twenty-First Century Policy Framework for Telecommunications.....................254 Specific Policy Reforms...................................................................375 The Enormous Benefits of a Broadband World................................................59Notes........................................................................................73Index........................................................................................83

Chapter One

For most of those born after 1985, it is hard to imagine a world without the Internet. Although it was initially supported by government funding, the Internet has emerged as a commercial force through the efforts of actors in the private sector. Telephone companies built its fiber-optic "backbone," which routes an unimaginably large and increasing volume of data, voice, and video traffic to Internet users through "last mile" connections to homes and offices. These connections exploit wireline and, increasingly, wireless technologies. In addition, millions of privately owned companies, big and small, provide the content on websites and applications ("apps") that makes the Internet so popular and so valuable. The latest Internet phenomenon, social networking, illustrates how the Internet is changing not only our commercial lives but also the way that we interact with each other.

All of this activity is made possible by broadband connections, made through the wire-based networks (millions of miles of copper-based coaxial or fiber-optic cables) and wireless networks (satellites and cell towers) that constitute the foundation of the modern Internet. The "broad" in broadband refers to the number of "bits" of voice and data that are able to travel per second through various "pipes," or channels. When the term was first used in the 1990s, the Federal Communications Commission (FCC)—a regulatory body about which we will have much to say throughout this book—defined the minimum broadband speed to be 256,000 bits per second, or 256 kilobits per second (kbps).

Just as Moore's Law accurately predicted the doubling of computing power every twelve to eighteen months, the speed of broadband networks has advanced at a remarkable rate over the last two decades. Today, the FCC defines the minimum acceptable broadband speed at 4 megabits per second (Mbps) for downloading information (1 Mbps for uploading it), and the agency has designed many of its policies and strategies to ensure that all Americans have access to at least one provider of such a service through a fixed physical wire—coaxial, beefed-up copper, or a fiber-optic cable—and actually use it. By that definition, more than 90 percent of American households are able to buy such a service. As of 2011, the latest year for which the FCC has reliable data, only about 7 million U.S. households did not have broadband access. If wireless broadband technologies—mobile phones or satellites—are counted, the unserved population drops by anywhere from 25 to 75 percent, so that the true number of households without access to broadband at the FCC's minimum speed is probably in the range of 2 to 5 million.

Yet the minimum is just that, a floor. In many areas of the country, technology has made it possible to deliver broadband connections at much greater speeds, double or more the 4 Mbps threshold. By 2012, cable infrastructure had been upgraded to so-called "next generation technology" (labeled DOCSIS 3.0), achieving average download speeds of 15 to 20 Mbps. At that time the technology was available in almost 100 million U.S. households, and telephone fiber-optic service at similar speeds was available in roughly half that number of homes. In addition, advanced 4G LTE wireless service with download speeds of 15 Mbps—the latest in seemingly never-ending jumps in technological capability, like the increases in the power of computer chips—was offered by providers such as AT&T and Verizon in many parts of the country, and certainly more areas will be included over time.

Although we have chosen to write this book on the future of telecommunications policy and regulation, we focus on broadband service because it is both the technology and metaphor for a new digital age of telecommunications that is based on an "Internet protocol" (IP). IP-based systems allow the convergence of what were once entirely separate media—voice over telephone wires, television over the air (technically, the radio-magnetic spectrum) or through cable, and data through the Internet. The FCC has historically regulated each of these media in a different manner.

The central thesis of this book is that the new digital IP world calls for an entirely different regulatory approach, one that recognizes that old telecommunications "silos" are anachronistic. Instead, today's broadband industry is both dynamic and, given the right regulatory environment, far more competitive than the twentieth-century telecommunications industries that it is replacing. The new realities imply a much more limited but still important role for the FCC going forward. Although many of our recommendations for getting to this brave new world are broadband specific, others are more general in nature and consistent with our broader argument that the time is now ripe for a complete overhaul of the FCC and its mission.

The stakes are high because a regulatory and policy structure that promotes deployment of rapid broadband and its use will deliver great benefits to the American people. But, as we highlight in chapter 5, the social benefits of broadband are tied to its speed.

Economists like to point to the "network externalities" afforded by technologies like broadband: the greater the number of people and businesses that are connected, the greater the benefits to all users. Those benefits are what one might call demand-side externalities. Another kind of network externality is found on the supply side. It manifests itself in a virtuous cycle between technology platforms and the applications that run on them: the more applications that run on a desktop operating system such as Windows or Mac OS or a mobile device platform such Android or iOS, the more desirable the system or platform is. Likewise, the more ubiquitous a fast broadband network, the likelier it is that more applications in a range of industries and sectors—including health care, education, and energy, to name just a few—will be developed, to the benefit of consumers.

It should not be surprising that "broadband penetration"—the share of a nation's population that has access to or has adopted broadband in some form—has become a widely accepted way of measuring a country's technological sophistication. Unfortunately, the only internationally comparable broadband penetration data, compiled by the Organization for Economic Cooperation and Development (OECD), count only fixed or wire-based broadband services delivered at the now poky rate of 256 kbps. Even by this outmoded measure, which ignores the rapidly growing use of mobile devices by people around the world to access the Internet at much...